May 14 (Bloomberg) -- A group named for the architect of
California’s Proposition 13, which has been copied and
criticized since voters approved it in 1978, has signed on to
the first changes in the tax-limiting law.

The Howard Jarvis Taxpayers Association has withdrawn
opposition to a bill that would make it harder for owners of
commercial properties to avoid higher taxes when transferring
ownership, according to its president, Jon Coupal, and the
bill’s author, Democratic Assemblyman Tom Ammiano of San
Francisco.

Ammiano’s bill would raise $73 million a year by
disallowing commercial property owners from avoiding
reassessment by dividing ownership so that no person or company
has a 50 percent stake, according to a legislative analysis of
the bill. Proposition 13 caps real estate taxes at 1 percent of
a property’s assessed value and limits increases on assessed
value to 2 percent a year unless it changes hands.

“This is not an attack on Proposition 13,” Coupal said in
a telephone interview from Sacramento. “In fact, it is an
attempt to restore the intent of Proposition 13, which is that
when a property changes hands, it needs to be reassessed.”

Nearly two-thirds of California voters approved Proposition
13, the start of a tax revolt that presaged the election of
Ronald Reagan as president two years later. The measure inspired
similar property tax caps in New York and New Jersey. The Jarvis
group credits Proposition 13 for establishing “predictable,
manageable, and fair” property tax rates that kept homeowners
from losing their property. Opponents blame the caps for
diminishing tax revenue to public schools and universities.

Winning Praise

Democrat Jerry Brown, then in his first term as California
governor, opposed Proposition 13 in 1978 but won praise from
Howard Jarvis himself for implementing it. Jarvis, who died in
1986, appeared in a 1978 Brown campaign commercial saying, “I
knew Governor Brown was the man who could make it work.”

Brown, now 76 and in his third term of leading the most-populous state, hasn’t moved to amend Proposition 13. His
spokesmen, Evan Westrup and Jim Evans, didn’t immediately
respond to an e-mailed inquiry about the governor’s position on
Ammiano’s bill.

The legislation would need a two-thirds vote in both
chambers of the legislature and Brown’s signature to become law.

Brown on Tuesday proposed a record $107.8 billion in
general-fund spending, buoyed by a recovering economy that has
generated taxes exceeding projections by Brown’s budget office.

Coupal noted that Ammiano’s bill wouldn’t change the
language of Proposition 13 itself, merely the legislation that
spells out how the measure should be applied. He said the change
would take away an argument by Proposition 13 opponents that
wealthy property owners dodge higher taxes through ownership
manuevers.

Ammiano spokesman Carlos Alcala said the assemblyman
continues to back broader changes in Proposition 13, such as
exempting commercial property from the assessment caps. Ammiano
wanted to tackle the most “egregious” abuse in the law before
he leaves office this year due to term limits, Alcala said by
telephone.